Finding Leader Character:
The Foundation
How
of Good
important is character in
the boardroom? In 2013, four
Governance
professors from Western University’s
Ivey Business School published an article
arguing that directors consider character
extremely significant to board effectiveness,
even though they seldom apply it in their
selection or performance review processes.
Now the academics have added some
hard data to support their ideas.
Gerard Seijts, Jeffrey Gandz,
Alyson Byrne and Mary
Crossan presented their ideas on
character for informed discussion across the
country at nine chapter meetings of the Institute
of Corporate Directors. Almost 800 directors and
aspiring directors attended one of the sessions,
allowing the scholars to put their ideas on trial and to
obtain feedback to sharpen their premises and
conclusions. In addition, 219 of the participants later
responded to an Internet-based survey on the subject. The
authors hope to use the insights to influence teaching in
business schools, executive education and board development
programs. They have outlined their findings below and their full
report is available online in ICD’s governance library:
http://www.icd.ca/leadership.
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Dimensions of Leader Character
Courage
brave, determined,
tenacious,
resilient, confident
Accountability
take ownership,
accepts consequences,
conscientious,
responsible
Temperance
patient, calm,
composed,
self-controlled,
prudent
L
private and not-for-profit sectors
that we interacted with over
the past five years readily agree that
character in organizational leadership
matters. They also told us that they
seldom refer to character in conversations or use it in recruiting, promoting and developing leaders. We have
initiated an ambitious research and
outreach program to address the challenges with bringing leader character
into workplace conversations.
Drive
passionate, vigorous,
results-oriented,
demonstrates
initiative, strives
for excellence
Collaboration
cooperative, collegial,
open-minded,
flexible,
interconnected
Judgment
situationally aware,
cognitively complex,
analytical, decisive, critical
thinker, intuitive, insightful,
pragmatic, adaptable
Justice
fair, equitable,
proportionate,
even-handed,
socially responsible
eaders in the public,
Transcendence
appreciative,
inspired, purposive,
future-oriented,
optimistic, creative
Integrity
authentic, candid,
transparent,
principled,
consistent
Humanity
considerate,
empathetic,
compassionate,
magnanimous,
forgiving
Humility
self-aware, modest,
reflective,
continuous learner,
respectful, grateful,
vulnerable
Our data show that when it comes
to corporate governance, leader
character is considered important,
that it is possible to assess it through
deep reference checking and expert
interviewing for new directors and
through candid, forthright reviews of
current board members. Yet, boards
don’t spend enough time and effort to
assess it. Why not? There are at least
two explanations.
First, there has been a great deal
of ambiguity around the construct of
leader character. Individuals may perceive character to be a highly subjective construct and do not have access
to a contemporary, practice-focused
vocabulary with which to address
character in the workplace. We have
addressed this issue by developing
a leader character framework (see
diagram) and developing both a selfassessment and 360-degree feedback
instrument of leader character. Practitioners were involved in this process to
ensure we got the language right.
January/February 2015 | 29
“
Many directors believe that it’s just fine to hire on
reputation; others have found that reputation to be
either wrong or, more likely, to cover only some of the
criteria that need to be fulfilled.
Second, all-too-often, boards are
searching for “rare” candidates based
on experience, gender, lack of conflicts
of interest if appointed, their status
in the business or governance community, their international experience
or other criteria. When you want
someone to join your board there is a
reluctance to go through a process of
thorough and systematic interviewing
in case the nominee is somehow “putoff ” by the process. Without doubt,
good, behaviorally based interviewing
that could expose character strengths
and deficiencies takes time and, unless
done very skillfully, may upset a candidate unless that candidate actually
sees it as something that a responsible
organization should do.
We think that very few directors
who sit on search committees are
themselves trained in good interviewing techniques. Developing these skills
is not a trivial exercise and setting up
and conducting such interviews requires dedicated time and effort. One
of the authors conducted a three-day
workshop on behaviorally-focused
interviewing and discovered that, on
the evening following the program,
the CEO of the company – who was
the sponsor of the interviewing skills
program and attended all three days
– hired a senior vice-president after
meeting him for a couple of drinks in
the hotel bar! When asked about it, his
response was: “He’s a known quantity
in the industry – no risk there.” The
newly hired executive lasted a year and
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was let go “because of lack of alignment of values.”
Boards and their selection committee are also confronted by a “reputation smokescreen” which is, in effect,
the age-old problem of the “halo”
effect that often obscures reality. The
more experienced a potential director
is, the more she or he is well known,
the more they have a reputation and
the less likely they are to be the subject of probing interviews and deep
reference checking. Good, probing
interviewing is often viewed as challenging to that reputation even though
it often confirms it. Similarly, deep
reference-checking is confounded by a
strong reputation that often gets in the
way of objective observations. Many
directors believe that it’s just fine to
hire on reputation; others have found
that reputation to be either wrong or,
more likely, to cover only some of the
criteria that need to be fulfilled.
“You need to be careful what
the world is telling you about other
people,” George Cope, president and
CEO of BCE Inc. said in an interview.
He cited a personal example of working with Nadir Mohamed, at the time
the CEO of BCE’s top competitor,
Rogers Communications, to acquire
Maple Leaf Sports and Entertainment
in 2011.
“It was very important for me to
determine whether the CEO was
someone we could work with. We
met, got to know each other as people,
and realized that while we and our
companies must compete fiercely in
”
the market every day, we could indeed
work together on this project,” Cope
said. “You may have impressions of
people from the media, and other
information sources, but I’ve learned
not to pre-judge people. Go and talk to
them - get to know them directly.”
Searches are often truncated when
the potential nominee is known to,
or even recommended by, a current
board member. Many directors are
suggested by sitting board members
and such recommendations carry
overwhelming weight if the sitting
board member is influential within the
board. Deferring to such recommendations often leads to an abbreviated
formal candidate evaluation. Because
of such self-censorship (e.g., for
political or self-preservation reasons)
groupthink may occur.
Based on anecdotal data and comments made by search experts at the
ICD chapter meetings, we believe
that few companies actually discuss
character elements with the search
consultants they hire to recruit a pool
of candidates. They “assume” that
character will be addressed and also
assume that an “absence of negatives”
indicates positive character dimensions. But these are not the same
things. To say “I’ve heard nothing bad
about X or Y” does not mean that they
have demonstrated courage, transcendent thinking, excellent judgment, or
other valued character dimensions.
Another theme that was discussed
during the chapter sessions was that
there tends to be an over-emphasis
on collaboration amongst board
members, often at the cost of courage, accountability and the quality of
decisions. Individuals refrain from
disagreeing with other board members
even when they should. A board member in one session stated that: “I think
the one dimension that boards experience in excess is collaboration. Boards
are natural breeding grounds for
groupthink – the persistent belief that
we need to come to consensus; boards
are expected to come together. I think
collaboration is an admirable goal, but
in its excess is detrimental to the board
and the decisions it produces.”
Board members also recognized
the place of judgment as being pivotal
to effective boards and that, without
judgment, decisions can be potentially
disastrous. One board member articulated that: “It’s amazing how good
people can do bad things. What is it
in the context that people miss? This
comes down to the central role that
judgment plays – you can have all the
[other] 10 dimensions of character but
if you exercise poor judgment, you can
still end up with disastrous situations.”
Recommendations
We have some recommendations
for director search, evaluation, performance review and renewal processes.
• Be explicit about the search
criteria and include the
character dimensions along with
competencies; make sure that if you
are using a search consultant they
know and understand the character
dimensions that are important to
the board.
• Ensure that whoever does the
interviewing is, in fact, a good
interviewer and, if they’re not, insist
that they take some training.
• When multiple interviews are
done sequentially, ensure that each
A Demand for More Character
94%
agree that the character of the CEO has a tremendous impact
on the effectiveness of the board
92%
believe that a critical role of the board is to evaluate the
character of their CEOs and C-suite level executives
70%
of respondents believe that boards spend
insufficient time addressing or assessing the
character of potential nominees to their boards
79%
agree that it is difficult to assess character compared
with assessing competencies
60+%
believe that both good interviewing
and deep reference checking can be
used successfully to assess character
64%
believe that the educational system
does a poor job of developing character
92%
believe that business schools need to address character-related
issues more than they do
66%
believe that character can be changed
after someone becomes an adult
Results from the Ivey Business School’s Internet-based survey of 219 people,
accounting for 443 boards, on the issue of character in the boardroom.
interviewer has a set of questions so
that the sessions are comprehensive
but not repetitive. Furthermore,
schedule a session of all involved
in the process to share their
observations. As the chair of the
selection committee, check to
ensure that all the criteria have
actually been covered in the
aggregate and that no key criteria
have been ignored.
• Task the search consultant, if one is
used, to develop a comprehensive
list of referees who actually know
the potential nominee rather
than just his or her reputation
and be thorough in requiring the
consultant to fully share the content
of the references, checking that they
have actually probed for character
strengths and deficiencies.
• When asking a referee whether
they “know” someone, care must
be taken to understand the context
of that knowledge. Has the referee
actually observed a potential
director in their role as director, as
a competitor, as an executive, as a
customer or supplier, as someone
who has worked for them and
so forth? Or, are they relying on
reputation?
• If a candidate resists or resents
discussion about character, then
you should resist the candidate! You
should be looking for candidates
January/February 2015 | 31
who themselves consider discussion
about character to be important
and, if asked the right questions in
the right way, will feel good about
the organization they are being
asked to consider serving.
• We urge boards that have adopted
formal director review processes to
include the character dimensions
we described in our paper in
those reviews. If, as suggested in
this study, directors view them as
important then surely they would
consider any review process that did
not address them as deficient.
• There are still many boards that
do not have formal processes
for character, preferring a more
informal occasional or periodic
discussion between each director
and the board or governance
committee chair. We urge those
doing these reviews to think about
the importance of these character
dimensions and feed them into the
discussion with individual directors.
We also see some value in directors
doing a personal, character-based
self-evaluation that they may want
to discuss with others or simply
reflect on themselves.
• While boards quite properly seek
diversity of experience, perspective,
gender, ethnicity or other criteria,
this should not extend to character.
It is not sufficient to have some
directors with accountability and
others who lack it; or some who
are courageous while others are
timid; or some who lack good
judgment while others have it; and
so on. Good governance requires
these character dimensions in each
director and hence in the board as a
whole.
When someone is appointed as a
director they have to work immediately with other directors, who may
be complete strangers, on important
matters requiring trust, discretion,
independent thinking and excellent
judgment. If there are doubts about
character, the board will not function well. Once appointed it is very
difficult to terminate a director and
the longer inappropriate or dysfunctional character-driven behaviors are
accepted and tolerated, the harder
they are to remediate. A thorough,
complete and expert assessment of
character will not guarantee board
performance but will go a long way
toward it.
This article originally appeared in the Director Journal, a publication of the Institute of Corporate Directors (ICD). Permission has been granted by the ICD to
use this article for non-commercial purposes including research, educational materials and online resources. Other uses, such as selling or licensing copies,
are prohibited.
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